With many experts continuing to see rocky times ahead for the stock market, it might be time to look at dividend stocks for the rest of 2023.
Dividend stocks are a way to diversify a portfolio that may be chasing growth a little too obsessively. They generate income in good times, bad times and, particularly important today, times of high inflation. (U.S. consumer prices rose 6.4% in January from a year ago.)
They also tend to outdo the S&P 500 over the long run.
One prominent portfolio that’s heavy on dividend stocks belongs to The Bill & Melinda Gates Foundation Trust. With the trust being used to pay for so many initiatives, income needs to keep flowing into it.
Dividend stocks help make this happen.
Here are three dividend stocks that occupy significant space in the foundation’s holdings.
Waste Management (WM)
It’s not the most glamorous of industries, but waste management is an essential one.
No matter what happens with the economy, municipalities have little choice but to pay companies to get rid of our mountains of garbage, even if those costs increase.
As one of the biggest players in the space, Waste Management remains in an entrenched position.
The shares have gone up 75% over the past five years. In 2022, operating revenue grew 9.9% year over year.
Currently offering a yield of 1.9%, Waste Management’s dividend has increased 20 years in a row.
The company has paid out $1.08 billion in dividends over the last year, and its roughly $2 billion in free cash flow for 2022 means investors shouldn’t have to worry about receiving their checks.
As a company whose fortunes typically follow that of the larger economy — that’ll happen when your equipment is a fixture on building sites the world over — Caterpillar is in an intriguing post-pandemic position.
The company’s revenues are feeling the effects of a paralyzed global supply chain, but President Joe Biden’s $1.2 trillion infrastructure bill means there could be an awful lot of building going on in the U.S. in the near future.
Read more: UBS says 61% of millionaire collectors allocate up to 30% of their overall portfolio to this exclusive asset class
Caterpillar’s mining and energy businesses also provide exposure to commodities, which tend to do well during times of high inflation.
The company’s stock has ridden higher raw material and petroleum prices to a greater than 50% increase over the past five years.
After announcing an 8% increase in June 2022, Caterpillar’s quarterly dividend is currently at $1.20 per share and offers a yield of 1.9%. The company has increased its annual dividend 28 years straight.
With grocery stores deemed essential businesses, Walmart was able to keep its more than 4,700 stores in the U.S. open throughout the pandemic.
Not only has the company increased both profits and market share since COVID coughed its way across the planet, but its reputation as a low-cost haven makes Walmart many consumers’ go-to retailer when prices are rising.
Walmart has steadily increased its dividends over the past 50 years. Its annual payout is currently $2.28 per share, translating into a dividend yield of 1.7%.
Walmart currently trades at $137 per share, off its 52-week highs of $160.77 set in April 2022.
A better way to generate income?
Of course, buying dividend stocks isn’t the only way to generate investment income.
Amid hot inflation and the uncertain economy, millionaire moguls are finding creative ways to effectively invest their millions.
Prime commercial real estate, for example, has outperformed the S&P 500 over a 25-year period. With the help of new platforms, these kinds of opportunities are now available to retail investors. Not just the ultra rich.
With a single investment, investors can own institutional-quality properties leased by brands like CVS, Kroger and Walmart — and collect stable grocery store-anchored income on a quarterly basis.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.